4.1 Supplier Management Integration

It is absolutely imperative that an effective method of managing suppliers be in place. Success or failure in lean will be directly correlated to our ability to establish supplier relationships that provide seamless supply. Supplier Management & Manufacturing personnel need to function as one cohesive team. 100% quality parts, materials & assemblies need to arrive at the product/process cell when required (not early or late) as storage space is absolutely minimal. In order to accomplish this, parts & materials from our certified suppliers must deliver directly to the point of use with minimal appropriate receiving inspection. Many of the suppliers should be authorized to utilize point of use stocking.

4.1  Supplier Management Integration

Vision: Supplier Management & Manufacturing personnel function as one cohesive team. In order to accomplish this, parts & materials from certified suppliers deliver directly to the point of use with minimal appropriate receiving inspection.

4.1.1  Certified supplier partnerships exist to enhance delivery performance, quality, and cost.

Supplier certification program not established. Static  Supplier base.

Goals established for supplier certification, 25% of suppliers  certified.

50%  of suppliers are certified.  Supplier base reduction underway.

75% of suppliers are certified.

90% or > of suppliers are certified.  Minimal supplier base.

4.1.2  Supplier Management Responsibility

Supplier Management is separate from Manufacturing.

Supplier Management is coordinating with Manufacturing.

Continuous & direct (face to face) communication between organizations.

Supplier Management & Manufacturing view supplier management as joint responsibility.

Shop floor personnel coordinate directly with suppliers for delivery. S/M&P manages the contract.

4.1.3  Minimized Inspection of Incoming Part numbers appropriate to quality level.

Traditional receiving inspection function.

25% of incoming parts numbers are not inspected.

50% of incoming parts numbers are not inspected.

75% of incoming part numbers are not inspected.

>90% of incoming part numbers are not inspected.

4.1.4  JIT Deliveries

4.1.4.1  Raw Material

No JIT contracts.

JIT delivery on a minimum of 25% of raw materials.

JIT delivery on a minimum of 50% of raw materials.

JIT delivery on a minimum of 75% of raw materials.

JIT delivery on >90% of raw materials.

4.1.4.2  Detail Parts

No JIT contracts.

JIT delivery on a minimum of 25% of detail parts.

JIT delivery on a minimum of 50% of detail parts.

JIT delivery on a minimum of 75% of detail parts.

JIT delivery on >90% of detail parts.

4.1.4.3  Assemblies

No JIT contracts.

JIT delivery on a minimum of 25% of assemblies.

JIT delivery on a minimum of 50% of assemblies.

JIT delivery on a minimum of 75% of assemblies.

JIT delivery on 90% + of assemblies.

4.1.4.4  Supplier “kitted” assemblies.

No JIT contracts

JIT delivery on a minimum of 25% of supplier kits.

JIT delivery on a minimum of 50% of supplier kits.

JIT delivery on a minimum of 75% of supplier kits.

JIT delivery on 90% + of supplier kits.

4.1.5  Point of Use Stocking By External Suppliers

4.1.5.1  Low value parts (standards & small details).

100% traditional stocking.

Point of use stocking negotiated with suppliers or implemented in pilot areas (under 20% of areas).

Point of use stocking in 21% - 49% of areas.

Point of use stocking in 50% - 89% of areas.

Point of use stocking fully utilized.  Over 90% of areas.

4.1.5.2  Mid-Value details and assemblies.

100% traditional stocking.

Point of use stocking negotiated with suppliers or implemented in pilot areas (under 20% of areas)

Point of use stocking in 21% - 49% of areas.

Point of use stocking in 50% - 89% of areas.

Point of use stocking fully utilized.  Over 90% of areas.

4.1.5.3  High Value Parts

100% traditional stocking.

Point of use stocking negotiated with suppliers or implemented in pilot areas (under 20% of areas)

Point of use stocking in 21% - 49% of areas.

Point of use stocking in 50% - 89% of areas.

Point of use stocking fully utilized.  Over 90% of areas.

4.1.5.4  Supplier “kitted” assemblies.

100% traditional stocking.

Point of use stocking negotiated with suppliers or implemented in pilot areas (under 20% of areas)

Point of use stocking in 21% - 49% of areas.

Point of use stocking in 50% - 89% of areas.

Point of use stocking fully utilized.  Over 90% of areas.

4.2 Shop Floor Control

Controlling work on the shop floor is a key area that a world class company must excel in. In order to support streamlined cellular manufacturing, a world class shop floor control system needs to be in place. Capacity planning must be accurate & understood by all required. The cycle times must be at absolute minimum levels, with bottlenecks removed to facilitate a smooth & efficient shop flow. All of the shop works to a common dispatch list - all unauthorized shortage reports have been eliminated. Set up times have been reduced to facilitate running small batches & shorten cycle times. Lot sizes are driven by the customer’s needs (takt time). The scheduling system is horizontally integrated across the site. Visual signals have been set up & utilized to drive the next need.

4.2  Shop Floor Control

Vision: The scheduling system is horizontally integrated across the site. Visual signals have been set up & utilized to drive the next need.

4.2.1  Capacity Planning

Capacity planning process not documented.

Capacity is analyzed after order release. Final offload decision after order launched.

Capacity is taken into account prior to  launching orders into the shop.

User Friendly capacity system  accessible to all teams.

Factory is level loaded and producing to customer demand.

4.2.2  Order Release

Material & tooling position is unknown at time of release.

Material & tooling position is unknown at time of release, but analyzed after release.

Material & tooling are forecast and analyzed prior to order release.

Orders are not released until all materials & tools are available.

Orders not released until all materials, tools  & machines are available.

4.2.3  Cycle Time & Shop Flow

No formal plan for cycle time reduction.

Formal plan exists. <24% progress to meeting objective.

25 - 49% progress toward meeting  goal.

50 - 74% progress toward meeting goal.

75% or better % progress toward meeting goal.

4.2.4  Parts Management - Impact of Shortages

Manages the shop by shortages. 75% - 100% of orders are expedited. A number of “Priority” lists exist.

Critical shortage list is the priority list.  50%  - 74% of orders are expedited.

Shortage position known by all. Orders are accurately tracked. (system & manual lists)

Focus on accurately forecasting needs via dispatch list.  No manual lists.

Shortages are dealt with as an exception and system speeds up to accommodate requirements.

4.2.5  Small Batch / Lot Size

Batch production and transportation in excess of customer requirement.

Produces and moves in small lots synchronized to customer requirements.

Pilot area(s) are producing and moving in a one piece flow.

Produces and moves between 50% of all operations in one piece flow.

Produces and ,moves between all operations in one piece flow.

4.2.6  Fully Integrated Scheduling System

A scheduling system in place plus additional safety stock is produced.

All scheduling is based on the scheduling system. No adjustment is made.

The scheduling system is constantly adjusted for scheduling.

The scheduling system is used only for long term planning. Schedule adjusts daily to reflect demand.

Cell produces based on Kanban signal. Back flushing is used.

4.3 Inventory System Integration

Managing  inventory effectively at a lean company is of utmost importance. Reducing lot sizes, limiting storage space, shortening cycle time and utilizing visual pull signals for the next need make it absolutely necessary that the right parts/materials/assemblies be at the correct location when required. Whatever inventory/supply system is utilized, the basic controlling principles remain the same: Deliveries are based upon the shop floor need & delivered just prior to the need, full integration with the shop floor control system, etc. Furthermore, moving to a seamless inventory supply with suppliers requires electronic data interface (EDI) or other solutions to provide real-time data on both supply, usage & quality. Any lot deliveries are in strict accordance with lot size / batch analysis.

4.3  Inventory System Integration

Vision: Deliveries are based upon the shop floor need & delivered just prior to the need.

4.3.1  Inventory System Integration With Supplier

No integration with supplier’s system.

Developing some integration with supplier’s systems.

Established EDI with some key suppliers as pilot.

Most major suppliers are transmitted data via EDI.

All major suppliers have EDI . All supplier problems are addressed prior to the next delivery.

4.3.2  Internal Pull System

All deliveries are based on negotiated delivery schedule.

Most deliveries are based on smaller sized lots. Kitting of parts to floor from stockrooms.

Deliveries are based upon minimal inventory pads to the original need dates. Kits are delivered in logical work sizes.

Kitting of parts by suppliers.

Deliveries are based upon the shop floor need and delivered just prior to need. No large lot deliveries.

4.3.3  Inventory Turns

Not measured.

1 element.

2 elements.

3 elements.

4 elements.

Elements:

1.       Measured at facility level

2.       Measured at cell level

3.       Continuous improvement over past 24 months

4.       Benchmark data of industry leaders is available and used frequently